In an unusual situation, the Ontario Court of Appeal is reviewing a controversial decision it made just over a year ago that fraudulent mortgages are binding once registered.

The challenge comes from Toronto homeowner Susan Lawrence, who was the victim of a sophisticated fraud.

'If it's enforceable then they can throw her out, sell the house and get their money and there's not a thing she could do to stop it or prevent it.'-Lawyer Morris Cooper

Her lawyer, Morris Cooper, argued Tuesday before a panel of five Court of Appeal judges that the 2005 ruling was a mistake that has opened the door to a flood of problems.

Cooper said the mortgage company in his client's case has chosen not to enforce the bogus mortgage, but he says the fact they could make individuals pay up should worry homeowners.

"If it's enforceable, then they can throw her out, sell the house and get their money and there's not a thing she could do to stop it or prevent it," said Cooper.

Lawrence discovered in January that she had been the victim of real estate fraud when the bank told her she no longer owned her home.

Thieves had forged her signature to obtain a $300,000 mortgage on her property, leaving her on the hook for the money.

'I'm sure the decision will be the right one': Lawrence

While a judge restored the title to her name, no financial relief was offered for the phoney mortgage.

The judge was bound by a 2005 decision by the Court of Appeal that stated fraudulent mortgages are legal once they are registered. That case, Household Realty vs. Liu, involved a wife who sold a home without the knowledge of her husband.

But that decision has met with resistance in lower courts and in one recent judgment, a lower court judge even absolved a Toronto couple from paying a fraudulent mortgage.

Lawrence is pleased her case is getting a second chance and is confident the end result will be favourable to her.

"It's a relief to come to the end and to have it all argued in court in front of the right people," said Lawrence. "I'm sure the decision will be the right one."

The Ontario Court of Appeal has reserved judgment. There's no word on when a decision can be expected.